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Bridges v. Citifinancial Auto Corporation

Court of Appeals of Louisiana, First Circuit

November 5, 2018

CYNTHIA BRIDGES, SECRETARY, DEPARTMENT OF REVENUE, STATE OF LOUISIANA
v.
CITIFINANCIAL AUTO CORPORATION FORMERLY TRANSOUTH FINANCIAL CORPORATION

          On appeal from the Nineteenth Judicial District Court In and for the Parish of East Baton Rouge State of Louisiana Docket No. 585, 424 Honorable Wilson E. Fields, Judge Presiding [1]

          Christopher K. Jones Antonio Ferachi Brent Cobb Debra Dauzat Morris Baton Rouge, LA Counsel for Plaintiff/Appellee Kimberly Robinson, in her capacity as successor to Cynthia Bridges, Secretary, Louisiana Department of Revenue.

          Kent A. Lambert Katie L. Dysart Meghan E. Carter New Orleans, LA and Richard A. Leavy New York, NY Counsel for Defendant/Appellant Citifinancial Auto Corporation, formerly known as Transouth Financial Corporation.

          BEFORE: GUIDRY, THERIOT, AND PENZATO, JJ.

          GUIDRY, J.

         A taxpayer appeals a default judgment rendered against it, finding it liable for a deficient sum of taxes, penalties, and interest as assessed by the Louisiana Department of Revenue. For the following reasons, we reverse.

         FACTS AND PROCEDURAL HISTORY

         Following an audit, the Louisiana Department of Revenue determined that Citifmancial Auto Corporation, formerly known as Transouth Financial Corporation, a corporation qualified to do business in Louisiana, had underpaid corporate income taxes for the tax years 2003, 2004, and 2005, and underpaid corporate franchise taxes for the tax years 2004, 2005, and 2006. Based on these determinations, the Louisiana Department of Revenue issued two separate notices, dated February 25, 2009, informing Citifmancial Auto of the amounts owed, plus accrued interest and penalties. The notices advised Citifmancial Auto that it had 30 days from the date of the notices to respond or remit payment. Neither payment nor a response was received, so on December 10, 2009, the secretary of the LDR (hereinafter "the LDR") filed a "Petition to Collect Tax" pursuant to La. R.S. 47:1561(A)(3) against Citifmancial Auto. The petition contained instructions to serve CT Corporation System as the registered agent for Citifmancial Auto.

         On October 28, 2011, the LDR filed a motion for preliminary default, pursuant to La. C.C.P. art. 1701, based on Citifmancial Auto's failure to answer or otherwise respond to the "Petition to Collect Tax." An order of preliminary default was entered by the district court on November 4, 2011. Over two years later, on April 24, 2014, the LDR filed a motion to confirm the preliminary default pursuant to La. C.C.P. art. 1702.1. Attached to the motion was a document signed and stamped by a deputy clerk of the district court indicating that no answer had been filed, a copy of a notice from the clerk of the district court showing service on CT Corporation on December 16, 2009, and the affidavit of a Revenue Tax Auditor Specialist with the LDR who was "knowledgeable of the facts alleged in [the] lawsuit." Attached to and referenced in the affidavit were the February 25, 2009 tax notices issued to Citiflnancial Auto.

         Upon finding that the LDR had "produced proof of its demand, and the law and the evidence being in its favor," the district court signed a judgment on May 2, 2014, confirming a default judgment against Citifmancial Auto and awarding the LDR $671, 290.57, along with judicial interest and all court costs. Notice of the default judgment, however, was not issued until January 19, 2018. Following notice of the default judgment, Citifmancial Auto timely sought and was granted a devolutive appeal.

         ISSUES PRESENTED FOR REVIEW

         On appeal, Citifmancial Auto presents the following issues for our consideration:

A. Whether the District Court manifestly erred in determining that the evidence was sufficient to establish Plaintiff s prima facie case.
B. Whether the District Court legally erred in confirming the Preliminary Default without either (i) conducting a hearing on the Motion to Confirm Preliminary Default or (ii) requiring a certificate of the attorney as to the type of claims, ...

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